Mercadona increases its investment by 50% up to 1,504 million and its turnover increases by 6%, to 24,305 million

12 march 2019

After deciding, two years ago, to launch a disruptive process and do whatever was necessary to transform the company and continue to be the best option for “The Boss”.

It has ended 2018 with a staff of more than 85,800 people, 300 of whom are Portuguese, after creating 1,800 stable, quality jobs, and has continued to advance in its responsible and sustainable business model, improving the quality of work and investing in the protection of the environment and animal welfare.

It has increased its turnover on a like to like basis by 6%, after increasing on average in 2018 by more than 50 tickets/store/day, which amounts to a total of more than 125 tickets/store/day from the launch of its transformation process in 2017.

The test started in May 2018 with the “Hive” (a warehouse for online shopping) in 97 towns in the province of Valencia has made it possible to double the number of customers and achieve a monthly turnover of 2.2 million euros.

Mercadona maintains its principle that “shared growth tastes better”, and has distributed the total profits generated during the year as follows: 295 million, of which two correspond to Portugal, to Society as taxes, at a 22% corporate tax rate; and 325 million to its employees as performance-related bonuses. Of the 593 million of the net profits (84% more than the previous year), 470 million were reinvested in the company as own resources, while the rest was distributed among shareholders via dividends.

Mercadona, a physical supermarket and online shopping company, has increased its investment in 2018 (charged to its own resources) by 50%, up to 1,504 million euros. This investment effort is part of the company's decision, taken two years ago, to do anything necessary, within the Mercadona Model, to transform the company, and has made it possible to experience a 6% increase in sales on a like to like basis, up to 24,305 million euros. Additionally, since the launch in 2017 of this disruptive transformation project, there has been a total increase of more than 125 tickets per store and day on average. All these data show that the transformative process in which all those who are part of the Mercadona Project are immersed is serving as a boost.

Mercadona closed 2018 with 1,636 stores, after opening 29 new supermarkets and closing 20 that did not meet the chain's space and comfort standards. These include the openings in Ceuta, La Palma, and Melilla, which have made it possible for the company to have a presence in all of Spain. Moreover, in its constant change process to be the best option for “The Boss", Mercadona has continued to renovate its supermarket network and ended the year with 400 supermarkets with the New Efficient Store Model (Store 8), after renovating 215 stores.

In addition, the new “Ready to Eat” section was launched in August in the Burjassot (Valencia) supermarket, which was gradually joined by others, ending the year with a total of 11 supermarkets with this new section in the province of Valencia. The excellent response from customers to this new initiative has led the company to plan to implement this initiative in 250 more supermarkets in the chain in 2019.

Being a physical supermarket and online shopping company

In May 2018, Mercadona launched its new “Hive”, an online warehouse where the preparation and distribution of online orders is centralised, serving 97 towns in the province of Valencia. After almost 8 months of “laboratory” in which the company has gradually added advances to improve its online service and make it profitable, the orders made through this channel in the area have almost doubled by comparison to the figures for the previous Teleshopping, which a monthly turnover of 2.2 million euros. These figures support the company’s decision to launch the online service in Barcelona in mid-2019.

Totaler Supplier. The evolution of a successful model

In 2018, Mercadona decided to make use of all its strong points to evolve the figures of the Integral Supplier and the Specialist Supplier, as well as the framework for relationships with them. In this context, the company has already launched the Totaler Supplier Model, which 1,400 suppliers, both integral and specialist suppliers, have already adhered to, which is an open project in which the producer’s size does not matter, but rather its specialisation and agility to satisfy “The Boss” with differential, high-quality products, which generates shared responsibility.

A more social and equitable new Collective Agreement and Equality Plan

In 2018, Mercadona created 1,800 new stable, quality jobs, which enabled the company to end the year with a staff of more than 85,800 employees, 300 of whom are Portuguese. During these twelve months, the company has devoted significant resources to improving its employees’ skills and knowledge, with an investment in training that exceeded 70 million euros. At the same time, it continued to opt for internal promotion, with a total of 860 employees promoted to positions of greater responsibility; and for equality, as proven by the facts that it ended 2018 with a majority of women employees, and that 47% of management positions are held by women.

In this commitment to the quality of its Human Resources, in late 2018 the company signed the new Collective Agreement and Equality Plan 2019-2013 with the main trade unions, reinforcing work-life balance and job stability. This new more egalitarian and social employment framework reinforces Mercadona’s commitment to stable and quality employment while consolidating its commitment to improving the purchasing power of the workforce with a minimum basic salary of €1328 a month/gross, in addition to the performance-related bonuses, other supplements forming part of the company’s Remuneration Policy in the form of annual increases of 11% up to band 5, and a progressive raise in the basic salary linked to the CPI and productivity.

A socially responsible company, committed to its environment and its employees

One more year, Mercadona has reasserted its principle that “Success tastes better when shared”. Of the total profits generated, 25% were distributed to the staff, with a total of 325 million euros in performance-related bonuses; 25% of earnings, 295 million, of which 2 million correspond to Portugal, reverted to Society as taxes, at a 22% corporate tax rate; 40% of 470 million was reinvested in the company as own resources, and the remaining 10% was distributed among shareholders via dividends.

To this shared growth must also be added the company's commitment to advancing in its responsible and sustainable business model, improving the quality of work and investing in the protection of the environment and animal welfare. To this end, it promotes, through its activity, responsible initiatives, such as the replacement of plastic bags by reusable and recyclable paper and recycled bags, repurposing the plastic from its store packaging; the commitment to market, by 2013, only eggs from range-free hens; and the constant commitment to sustainable transport, with 54 lorries fuelled by natural gas.

As a result of this commitment to shared growth, and in accordance with the methodology updated by the Valencia Institute for Economic Research (IVIE), Mercadona’s global contribution to the generation of wealth in Spain represents 3.4% of total employment in Spain (630,000 jobs), 1.9% of the GDP (22,900 million euros), and a purchasing volume in the national market of 18,640 million euros, which amounts to 85% of the total purchases made by the company.

Internationalisation: a milestone for Mercadona

After communicating the start of the internationalisation process in 2016 in Portugal, the company has continued to work during these twelve months to implement this project, which will materialise in the second half of 2019 with the opening of its first stores in the districts of Braga, Porto, and Aveiro. To this end, the company already has 300 employees in Portugal, and in 2018 invested almost 60 million euros, which, in addition to the construction of the stores, will make it possible to open a logistics centre in Póvoa de Varzim. During these twelve months the company has continued to define the selection to adapt it to the Portuguese “Boss's” tastes and habits. To this end, it has run more than 2,000 coinnovation sessions in the Matosinhos Coinnovation Centre (Greater Porto).

New record investment of more than 2,300 million euros in 2019

As part of the company shareholders’ commitment to continue to do, within the Model, all that is required to transform Mercadona, in 2019 the company intends to make a new historic investment of more than 2,300 million euros. This effort will be devoted to the opening of 49 new supermarkets, 10 of them in Portugal; to the renovation of 390 supermarkets with the new Efficient Store Model (Store 8), to the continued development of the Global Fresh Products Project, and to the implementation of the new Ready to Eat section, which is expected to be extended to 250 more supermarkets over the year.

Another key goal for Mercadona in 2019 will be the removal of overexertion and the optimisation of the logistics network. This latter challenge is being tackled through the automation of the logistics centres. Moreover, the company will continue to devote significant resources to the digital transformation, another vector for growth, and to the opening of two new warehouses for online shopping (Hives).

The president of Mercadona, Juan Roig, has said that “2018 has been a year of many transformative initiatives for the company. The results of this disruptive transformation project which we launched two years ago would not be possible without the effort of the 85,800 Mercadona employees to guarantee, every day in their routine work, the satisfaction of “The Boss”, our customers”. For Juan Roig, “all of us who are part of Mercadona have set a clear goal for 2019: seeking sustainable growth based on efficiency, differentiation, sustainability, and innovation, with the determination and humility required to correct the mistakes that we will make along the way and continue to build a project that people want to exist and that is committed to shared growth. As I read in the book Conscious Capitalism, ‘In the same way as people do not only live to eat, companies do not exist just to make a profit; however, people cannot live without eating, and companies cannot exist without profits”.

Juan Roig in the “Ready to Eat” section after the 2018 annual Press Conference.

Header image: Juan Roig and members of the Management Committee in the “Ready to Eat” section after the 2018 annual Press Conference.